Ancora pushes Everbridge for sale, sees over $70 per share takeout value
Everbridge, Inc. (EVBG) operates as a software company, providing enterprise software applications that automate and accelerate organizations operational response to critical events in the United States and internationally. The company has a market cap of around $1.6B.
Ancora Holdings Group, which owns approximately 4% of Everbridge’s outstanding common stock, issued an open letter to the company’s board.
It states in part: “We have spent a considerable amount of time reviewing Everbridge’s corporate governance, executive compensation, operations and sales, and overall strategy.
Given the immense destruction of shareholder value that has occurred under the current leadership team, we call on the Board of Directors to commence an immediate exploration of strategic alternatives.
We believe Everbridge is dramatically undervalued at current stock prices, and a sale to a well-capitalized acquirer could deliver more than $70 per share, or a more than 90% premium, for shareholders based on recent valuation multiples for both public and private company peers…
We believe Everbridge is a valuable strategic asset addressing a mission critical need in a large market with vast upside potential.
We believe Everbridge is dramatically undervalued at current share prices, representing an attractive acquisition target to both strategic and financial buyers.
In our view, the issues the Company is facing are not structural, but rather self-inflicted due to incompetent leadership that has failed to execute.”
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Republic Services to acquire US Ecology for $48.00 per share in cash
Republic Services (RSG) and US Ecology (ECOL) have entered into a definitive agreement under which Republic Services will acquire all outstanding shares of US Ecology for $48 per share in cash, representing a total value of approximately $2.2B including net debt of approximately $0.7B.
US Ecology, Inc. provides environmental services to commercial and government entities in the United States, Canada, Europe, the Middle East, Africa, Mexico, internationally. It operates through three segments: Waste Solutions, Field Services, and Energy Waste. It offers specialty waste management services, including treatment, disposal, beneficial re-use, and recycling of hazardous, non-hazardous, and other specialty waste at company-owned treatment, storage, and disposal facilities, as well as wastewater treatment services.
Republic Services, Inc. provides non-hazardous solid waste collection, transfer, disposal, recycling, and environmental services in the United States.
The transaction is not subject to a financing condition.
Republic Services intends to finance the transaction using existing and new sources of debt.
Following completion of the transaction, Republic Services expects to maintain a strong balance sheet and solid investment-grade credit rating.
The company plans net debt-to-EBITDA, as defined in our credit agreement, to return back below 3x within 18 months of closing the transaction.
The transaction was unanimously approved by the boards of directors of both companies and is expected to close by the end of the second quarter, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals and approval by holders of a majority of the outstanding shares of US Ecology’s common stock.
ECOL is up $19.28 to $47.48. RSG is up 24 cents to $127.19.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Cedar Fair jumps after Bloomberg report of SeaWorld takeover bid
SeaWorld Entertainment (SEAS) has offered to buy Cedar Fair (FUN) for around $3.4B or $60 per share, Bloomberg reports, citing people with knowledge of the matter.
Cedar Fair owns and operates amusement and water parks, and complementary resort facilities in the United States and Canada. Its amusement parks include Cedar Point located on Lake Erie between Cleveland and Toledo in Sandusky, Ohio; Knott’s Berry Farm near Los Angeles, California; Canada’s Wonderland near Toronto, Ontario; Kings Island near Cincinnati, Ohio; Carowinds in Charlotte, North Carolina; Kings Dominion situated near Richmond, Virginia; California’s Great America located in Santa Clara, California; Dorney Park & Wildwater Kingdom in Allentown, Pennsylvania; Worlds of Fun located in Kansas City, Missouri; Valleyfair situated near Minneapolis/St. Paul, Minnesota; Michigan’s Adventure situated near Muskegon, Michigan; Schlitterbahn Waterpark & Resort New Braunfels in New Braunfels, Texas; and Schlitterbahn Waterpark Galveston in Galveston, Texas.
SeaWorld Entertainment operates as a theme park and entertainment company in the United States. The company operates SeaWorld theme parks in Orlando, Florida; San Antonio, Texas; and San Diego, California, as well as Busch Gardens theme parks in Tampa, Florida, and Williamsburg, Virginia.
Cedar Fair Properties
The companies are working with advisers on the proposal and deliberations are ongoing, sources told Bloomberg.
It is unclear if the approach will lead to a transaction, they added.
Shares of SeaWorld are little changed at $59.29 following the report while Cedar Fair halted for volatility after jumping 11% to $55.59.
Six Flags Entertainment (SIX), which owns amusement parks like Cedar Fair, is up 5% to $41.60 following the report.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Spectrum Brands agrees to sell Hardware & Home Improvement segment for $4.3B
Spectrum Brands Holdings (SPB) announced it has entered into a definitive agreement to sell its HHI segment to ASSA ABLOY (ASAZY) for $4.3B in cash, which it said represents over 14 times HHI’s expected FY21 Adjusted EBITDA.
Upon closing of the transaction, Spectrum Brands expects to receive approximately $3.5B in net proceeds, subject to final tax calculations and purchase price adjustments.
Spectrum Brands expects to use the proceeds from this transaction to repay debt and reduce its gross leverage ratio to approximately 2.5x times in the near term.
Excess proceeds are expected to be allocated to invest for organic growth, fund complementary acquisitions and return capital to shareholders.
The company expects to maintain its quarterly cash dividend of 42c per common share, which will be subject to the company’s continued review from time to time.
The sale of HHI is expected to close following the receipt of certain regulatory approvals and customary closing conditions.
The results of operations of HHI will be reported as discontinued operations beginning in the fourth quarter of 2021. David Maura, CEO of Spectrum Brands, said, “I am exceedingly proud of the fact that our Hardware & Home Improvement business nearly doubled its EBITDA under Spectrum Brands’ ownership.
I am pleased to know that HHI has found a new home with a great partner, and I am confident that ASSA ABLOY will take it to its highest potential, bringing great value and innovation to consumers for generations to come.
We believe this transaction demonstrates the tremendous value of Spectrum Brands as an owner and steward of our businesses and places the Company in a strong position for the future by allowing us to further reduce our leverage levels, and enhance our capital allocation strategy.
Our remaining business will be more focused, allowing us to prioritize innovation to accelerate organic growth and pursue synergistic acquisitions to further drive value creation in Global Pet Care and Home & Garden, while continuing to look for strategic and organic ways to enhance the value of Home and Personal Care.
After the closing, we will become a more pure play consumer staples company with higher growth rates and strong margins.”
The company added: “Spectrum Brands will be a simplified business consisting of three focused business units with leading market share, strong growth opportunities and consistent performance.
The pro forma business generated $3.0B in net sales and $386 million in Adjusted EBITDA representing a 13.0% margin for the LTM period ended July 4, 2021.
Spectrum Brands will report its fourth quarter 2021 results in mid-November and expects to provide Fiscal 2022 Earnings Framework at that time.”
ASSA ABLOY AB is a Swedish company that provides door opening products, solutions, and services for the institutional, commercial, and residential markets in Europe, the Middle East, Africa, North and South America, Asia, and Oceania. In addition, the company offers entrance automation products, services, and components, such as automatic swing, sliding, and revolving doors; industrial doors; garage doors; high-performance doors; docking solutions; hangar doors; gate automation products; components for overhead sectional doors and sensors; and high security fencings and gates. The company provides its products primarily under the ASSA ABLOY, Yale, and HID brands.
Spectrum’s Hardware & Home Improvement segment offers hardware products under the National Hardware and FANAL brands; locksets and door hardware under the Kwikset, Weiser, Baldwin, EZSET, and Tell Manufacturing brands; and plumbing products under the Pfister brand. Its Home and Personal Care segment provides home appliances under the Black & Decker, Russell Hobbs, George Foreman, Toastmaster, Juiceman, Farberware, and Breadman brands; and personal care products under the Remington and LumaBella brands.
The company’s Global Pet Care segment provides rawhide chewing, dog and cat clean-up and food, training, health and grooming, small animal food and care, and rawhide-free products under the 8IN1 (8-in-1), Dingo, Nature’s Miracle, Wild Harvest, Littermaid, Jungle, Excel, FURminator, IAMS, Eukanuba, Healthy-Hide, DreamBone, SmartBones, ProSense, Perfect Coat, eCOTRITION, Birdola, and Digest-eeze brands.
ASAZY is down 38 cents to $15.53 per share while SPB is up $15 to $94.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
NY AG announces $1.1B agreement with big three drug distributors over opioids
New York Attorney General Letitia James announced an agreement with McKesson (MCK), Cardinal Health (CAH), and Amerisource Bergen (ABC) – three of the nation’s largest drug distributors – that will deliver up to $1.1B to New York state to combat the ongoing opioid epidemic.
“The $1.1B agreement is the largest monetary settlement ever negotiated by Attorney General James. The agreement resolves claims made by Attorney General James for the three companies’ role in helping to fuel the opioid epidemic and will remove the three distributors from New York’s ongoing opioid trial, currently underway in Suffolk County State Supreme Court…
Additionally, late last month, Attorney General James announced an agreement with Johnson & Johnson (JNJ) that removed the company from New York’s opioid trial in exchange for up to $230M for the state’s opioid prevention and treatment efforts, as well as it ending the sale of opioids nationwide.
The trial against the three remaining defendants – Endo Health Solutions (ENDP), Teva Pharmaceuticals USA (TEVA), and Allergan Finance (ABBV) – is currently underway and will continue in state court,” the AG stated.
As part of today’s agreement, McKesson, Cardinal Health, and Amerisource Bergen will pay New York state a total of up to $1,179,251,066.68, of which more than $1 billion will go towards abatement.
Payments will start in just two months and will continue over the course of the next 17 years, the AG said.
Opioids are a class of drugs that include the illegal drug heroin, synthetic opioids such as fentanyl, and pain relievers available legally by prescription, such as oxycodone (OxyContin®), hydrocodone (Vicodin®), codeine, morphine, and many others.
Fentanyl and similar compounds like carfentanil are powerful synthetic opioids — 50 to 100 times more potent than morphine. High doses of opioids, especially potent opioids such as fentanyl, can cause breathing to stop completely, which can lead to death.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
RAPT Therapeutics, Inc. (RAPT) announced positive topline results from its randomized placebo-controlled Phase 1b clinical trial of RPT193 as monotherapy in 31 patients with moderate-to-severe atopic dermatitis (AD).
Atopic dermatitis (eczema) is a condition that makes your skin red and itchy. It’s common in children but can occur at any age. Atopic dermatitis is long lasting (chronic) and tends to flare periodically. It may be accompanied by asthma or hay fever.
After four weeks of treatment, patients with moderate-to-severe AD who received RPT193 showed a 36.3% improvement from baseline in the Eczema Area and Severity Index (EASI) score, a standard measure of disease severity, compared to 17.0% in the placebo group.
Notably, in the two-week period following the end of treatment, the RPT193 group showed continued improvement and further separation from placebo with a 53.2% improvement in EASI at the six-week time point compared to 9.6% in the placebo group. This continued improvement may be related to RPT193’s mechanism of action, which is upstream of other agents targeting cytokines or signaling pathways.
Emma Guttman-Yassky, M.D., Ph.D., the Waldman Professor of Dermatology and System Chair Department of Dermatology at the Icahn School of Medicine at Mount Sinai, and member of RAPT’s Scientific Advisory Board, added, “I am very excited about these results as they not only demonstrate clinically meaningful improvement after just four weeks of treatment, but also further improvement for two weeks after completion of treatment. This may suggest that this novel mechanism of action targeting CCR4 on Th2 cells could have prolonged, disease-modifying effects, which could differentiate it from other agents. Along with being an oral drug that seems to have promising clinical activity and a well-tolerated safety profile, RPT193 could fill a high unmet medical need for AD patients.”
Cantor Fitzgerald
Cantor Fitzgerald analyst Alethia Young raised the firm’s price target on Rapt Therapeutics to $71 from $51 and reiterates an Overweight rating on the shares. The stock in midday trading is up 110%, or $19.60, to $38.17. This morning’s RPT193 data update “was robust with clear clinical benefit compared to placebo on all exploratory endpoints,” Young tells investors in a research note.
The analyst took the drug’s probability of success in atopic dermatitis to 50% from 25% previously, and increased her peak sales estimates. Young sees a “large unmet need” for a safe and effective oral treatment which is separate from the injectable market, and models peak sales of $4B in atopic dermatitis by 2035. She views Rapt’s risk/benefit profile as potentially best-in-class for an oral treatment.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Canadian Pacific says prepared to re-engage with Kansas City Southern
Canadian Pacific (CP) sent the following letter to the Surface Transportation Board in response to the Kansas City Southern (KSU) Board of Directors’ decision to terminate the Merger Agreement with CP:
Canadian Pacific wants to merge with Kansas City Southern
“I am writing on behalf of the Canadian Pacific Applicants in this proceeding to advise the Board and Interested Parties of the CP Applicants’ intentions in light of Kansas City Southern’s decision to terminate the merger agreement between CP and Kansas City Southern and to enter a merger agreement with Canadian National Railway.
For the reasons explained below, CP intends to proceed to prepare and file its Application in this docket seeking Board authority to control KCS and its U.S. rail carrier subsidiaries.
The decision of KCS’s board of directors to designate CN’s offer a “superior proposal” reflects the extreme price CN has offered KCS in order to extinguish CP’s proposed transaction,2 coupled with CN’s undertaking to attempt to absolve KCS and its shareholders of the regulatory risks associated with CN’s proposed acquisition through the use of a voting trust. In order to neutralize the regulatory risks posed by CN’s proposed transaction from the perspective of KCS’s shareholders,
CN’s agreement to acquire KCS is conditioned on CN’s ability to acquire KCS shares in advance of receiving Board approval to control KCS via the use of a voting trust.
On May 17, the Board ruled in Finance Docket No. 36514 that CN’s proposed acquisition of KCS is subject to the 2001 Major Merger rules, and, accordingly, that CN’s proposed use of a voting trust requires formal STB approval under 49 U.S.C. Section1180.4(b)(4)(iv).
The Combined network covers Gulf of Mexico to Pacific Ocean
The Board explained that it would “take a more cautious approach to a voting trust” in the CN proceeding and that its “consideration of whether the proposed use of a voting trust in a potential CN-KCS transaction is ‘consistent with the public interest’ would be informed by argument on both the potential benefits and costs of such use.”
CP believes that CN cannot demonstrate that its proposed use of a voting trust would be “consistent with the public interest” for reasons CP has already summarized and will address further in its comments on CN’s proposal in Finance Docket No. 36514, once CN refiles its motion seeking Board approval and the Board establishes a comment period.
Because STB Voting Trust Approval is a condition to closing, were CN unable to use a voting trust, CN’s proposed acquisition of KCS could not be consummated. KCS would then face the choice of whether to renegotiate the CN-KCS merger agreement in order to proceed with CN without the use of a voting trust.
Were KCS presented with the question of how to proceed following a decision by the Board not to approve CN’s proposed use of a voting trust, CP anticipates being available to engage with KCS to enter into another agreement to acquire KCS.
CP expects that such an agreement would be in substantially the form of the merger agreement previously entered into by CP and KCS, which was previously noticed in this docket and reviewed by the Board in connection with its approval of CP’s proposed voting trust agreement.
Accordingly, CP intends to proceed forward with the preparation of its Application in this docket seeking Board authority to acquire control of KCS.
CP believes that pursuing its Application is in the best interests of both KCS and the public so that the pro-competitive CP/KCS transaction can proceed to be reviewed by the Board and – in the event KCS’s agreement with CN is terminated or CN is otherwise unable to acquire control of KCS – a potential acquisition of KCS by CP could be implemented without undue delay, all in accord with the rulings and processes already established by the Board in this docket.
CP looks forward to establishing that its acquisition of control of KCS would be consistent with the public interest.”
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
AT&T, Discovery to create global DTC business through Reverse Morris Trust
AT&T (T) and Discovery (DISCA) announced a definitive agreement to combine WarnerMedia’s premium entertainment, sports and news assets with Discovery’s nonfiction and international entertainment and sports businesses to create a standalone global entertainment company.
ATT to merge it’s media assets with Discovery
Under the terms of the agreement, which is structured as an all-stock, Reverse Morris Trust transaction, AT&T would receive $43B in a combination of cash, debt securities, and WarnerMedia’s retention of certain debt, and AT&T’s shareholders would receive stock representing 71% of the new company; Discovery shareholders would own 29% of the new company.
The boards of both AT&T and Discovery have approved the transaction.
Discovery to merge with ATT media
Bringing together the leadership teams, content creators, and series and film libraries.
The new company is projected for 2023 revenue of approximately $52B, adjusted EBITDA of approximately $14B, and free cash flow conversion rate of approximately 60%.
The transaction is expected to create at least $3B in expected cost synergies annually for the new company.
The new company will compete globally in the direct-to-consumer business bringing content to DTC subscribers across its portfolio, including HBO Max and the recently launched discovery+.
The transaction will combine WarnerMedia’s content library of IP with Discovery’s global footprint, local-language content and regional expertise across more than 200 countries and territories.
The companies announced that Discovery president and CEO David Zaslav will lead the proposed new company with a management team and operational and creative leadership from both companies.
Discovery’s current multiple classes of shares will be consolidated to a single class with one vote per share.
The new company’s board will consist of 13 members, seven initially appointed by AT&T, including the chairperson of the board; Discovery will initially appoint six members, including CEO David Zaslav.
The combination will be executed through a Reverse Morris Trust, under which WarnerMedia will be spun or split off to AT&T’s shareholders via dividend or through an exchange offer or a combination of both and simultaneously combined with Discovery.
The transaction is expected to be tax-free to AT&T and AT&T’s shareholders. In connection with the spin-off or split-off of WarnerMedia, AT&T will receive $43B in a combination of cash, debt securities and WarnerMedia’s retention of certain debt.
David Zaslav to head the new company
The new company expects to maintain investment grade rating and utilize the significant cash flow of the combined company to rapidly de-lever to approximately 3.0x within 24 months, and to target a new, longer term gross leverage target of 2.5x-3.0x.
WarnerMedia has secured fully committed financing for the purposes of funding the distribution.
The transaction is anticipated to close in mid-2022, subject to approval by Discovery shareholders and customary closing conditions, including receipt of regulatory approvals.
No vote is required by AT&T shareholders. Agreements are in place with John Malone and Advance to vote in favor of the transaction.
Elliott Management
Elliott Investment Management released a statement on behalf of Managing Partner Jesse Cohn and Portfolio Manager Marc Steinberg regarding AT&T’s plan to merge media assets with Discovery:
Elliott is a major shareholder in ATT
“It has been a transformational year at AT&T year since John Stankey took over as CEO, and today’s announcement represents another impressive step in the Company’s recent evolution.
AT&T has now executed on its promise to streamline operations and re-focus on its core businesses, all while improving operational execution, enhancing its financial position and advancing its corporate governance. As investors, Elliott supports AT&T in its efforts to best position the company for future success.”
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Equity Commonwealth to acquire Monmouth Real Estate for $3.4B
Equity Commonwealth (EQC) and Monmouth Real Estate (MNR) announced that they have entered into a definitive merger agreement by which Equity Commonwealth will acquire Monmouth in an all-stock transaction, valued at approximately $3.4B, including the assumption of debt.
The combined company is expected to have a pro forma equity market capitalization of approximately $5.5B.
Under the terms of the agreement, Monmouth shareholders will receive 0.67 shares of Equity Commonwealth stock for every share of Monmouth stock they own.
Based on the closing price for Equity Commonwealth on May 4, this represents approximately $19.40 per Monmouth share.
The merger agreement provides for Monmouth to declare and pay one additional regular quarterly common stock dividend of 18c per share without Equity Commonwealth paying a corresponding common dividend to its shareholders.
Accordingly, the total consideration to be received by the Monmouth shareholders in the transaction is $19.58 per Monmouth share.
Equity Commonwealth and Monmouth shareholders are expected to own approximately 65% and 35%, respectively, of the pro forma company following the close of the transaction.
Monmouth’s portfolio is comprised of 120 properties totaling 24.5M square feet. In addition, Monmouth has six properties totaling 1.8M square feet under contract and leased to investment grade tenants.
Closings for these acquisitions are expected in 2021 and 2022.
The company will continue to be led by president and CEO David Helfand and the existing senior management team.
Upon closing, the number of trustees on Equity Commonwealth’s board will be expanded to 10, with two individuals designated by Monmouth’s board.
Sam Zell will remain the chairman of the board of trustees.
The transaction is expected to close during the second half of 2021, subject to customary closing conditions, including approval by the common shareholders of both Equity Commonwealth and Monmouth.
Sam Zell to become Chairman of the new company
The board of trustees of Equity Commonwealth and the board of directors of Monmouth Real Estate have each unanimously approved the transaction.
Equity Commonwealth ( EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties in the United States. EQC’s same property portfolio is comprised of 4 properties and 1.5 million square feet.
Monmouth Real Estate Investment specializes in single tenant, net-leased industrial properties, subject to long-term leases, primarily to investment-grade tenants. Monmouth Real Estate is a fully integrated and self-managed real estate company, whose property portfolio consists of 121 properties, containing a total of approximately 24.5 million rentable square feet, geographically diversified across 31 states.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Microsoft to acquire Nuance for $56.00 per share in cash, or $19.7B
Microsoft (MSFT) and Nuance Communications (NUAN) announced they have entered into a definitive agreement under which Microsoft will acquire Nuance for $56.00 per share, implying a 23% premium to the closing price of Nuance on Friday, April 9, in an all-cash transaction valued at $19.7B, inclusive of Nuance’s net debt.
Nuance sold for $19.7B
Nuance is a trusted cloud and AI software leader representing decades of accumulated healthcare and enterprise AI experience.
Mark Benjamin will remain CEO of Nuance, reporting to Scott Guthrie, executive vice president of Cloud & AI at Microsoft.
The transaction is intended to close this calendar year.
Upon closing, Microsoft expects Nuance’s financials to be reported as part of Microsoft’s Intelligent Cloud segment.
Microsoft expects the acquisition to be minimally dilutive (less than 1%) in fiscal year 2022 and to be accretive in fiscal year 2023 to non-GAAP earnings per share, based on the expected close timeframe.
Non-GAAP excludes expected impact of purchase accounting adjustments, as well as integration and transaction-related expenses.
The acquisition will not impact the completion of its existing share repurchase authorization.
Nuance Communications, Inc. provides conversational and cognitive artificial intelligence (AI) innovations that bring intelligence to everyday work and life. The company delivers solutions that understand, analyze, and respond to people – amplifying human intelligence to increase productivity and security.
B. Riley analyst Zach Cummins reiterates a Buy rating on LivePerson (LPSN) with a $77 price target after Microsoft (MSFT) acquired Nuance Communications (NUAN), a provider of conversational commerce solutions, with expertise geared toward the healthcare vertical.
The potential deal acquisition provides a “positive valuation data point” for LivePerson, a leading provider of conversational commerce solutions across the telecom, financial services, retail, and consumer verticals, Cummins tells investors in a research note.
LivePerson currently trades at an enterprise value to sales multiple of 6.5 times, below the comp group median of 9.5 times and Nuance’s implied takeout multiple of 12.5 times, says the analyst.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Salesforce acquires Slack in cash and stock deal worth $27.7B
Salesforce (CRM) and Slack Technologies (WORK) have entered into a definitive agreement under which Salesforce will acquire Slack.
Under the terms of the agreement, Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share, representing an enterprise value of approximately $27.7 billion based on the closing price of Salesforce’s common stock on November 30.
The boards of each of Salesforce and Slack have approved the transaction and the Slack board recommends that Slack stockholders approve the transaction and adopt the merger agreement.
The transaction is anticipated to close in the second quarter of Salesforce’s fiscal year 2022.
Salesforce goes shopping
Salesforce has also entered into a voting agreement with certain stockholders of Slack common stock, under which each such stockholder has agreed to vote all of their Slack shares in favor of the transaction at the special meeting of Slack stockholders to be held in connection with the transaction, subject to certain terms and conditions.
The Slack shares subject to the agreement represent approximately 55% of the current outstanding voting power of the Slack common stock.
Salesforce expects to fund the cash portion of the transaction consideration with a combination of new debt and cash on Salesforce’s balance sheet.
One year chart of Slack Tech. stock price
Salesforce has obtained a commitment from Citigroup, Bank of America, and JPMorgan Chase for a $10B senior unsecured 364-day bridge loan facility.
Salesforce said, “Slack will be deeply integrated into every Salesforce Cloud.
Five year chart of Salesforce stock price
As the new interface for Salesforce Customer 360, Slack will transform how people communicate, collaborate and take action on customer information across Salesforce as well as information from all of their other business apps and systems to be more productive, make smarter, faster decisions and create connected customer experiences.”
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Sage Therapeutics, Biogen announce collaboration on SAGE-217, SAGE-324
Biogen (BIIB) and Sage Therapeutics (SAGE) announced that they have executed a global collaboration and license agreement to jointly develop and commercialize zuranolone for major depressive disorder, postpartum depression and other psychiatric disorders and SAGE-324 for essential tremor and other neurological disorders.
Sage receives a large investment from Biogen
Zuranolone, a potential first-in-class, two-week, once-daily oral therapy in development for the treatment of MDD and PPD, is currently in Phase 3 development as part of the LANDSCAPE and NEST clinical programs.
Zuranolone has breakthrough therapy designation from the U.S. Food and Drug Administration (FDA) for MDD and, if successfully developed and approved, has the potential to be a novel treatment paradigm in depression.
Biogen gambles on Sage’s depression drug
The vision for zuranolone in MDD and PPD is based on its potential, being evaluated in the LANDSCAPE and NEST development programs, to work rapidly and to continue providing sustained benefit beyond the period of dosing.
Together, these two features, if supported by positive clinical efficacy and safety data, could provide an alternative option to how depression is treated today based on a target profile of an “as-needed” short course of treatment for a depressive episode, with rapid and sustained efficacy and favorable tolerability.
The development of an “as-needed” treatment for depression may help ease the difficulties associated with chronic use of antidepressants and may enhance quality of life and patient adherence.
To date, two positive pivotal studies have been completed with zuranolone 30 mg, one in MDD (MDD-201) and one in PPD.
Additionally, while the Phase 3 MOUNTAIN Study of zuranolone in MDD did not meet its primary endpoint, the encouraging data from the recently announced MOUNTAIN six-month follow-up period and the topline interim SHORELINE Study analysis, suggest the potential for zuranolone, if successfully developed and approved, to be uniquely positioned as a disruptive, distinct and novel treatment approach for patients.
Biogen and Sage believe that zuranolone is clinically active in MDD based on the data compiled to date and look forward to planned data readouts in 2021.
Sage is pursuing three development pathways for zuranolone in the U.S.: PPD; acute rapid response therapy in MDD when co-initiated with new standard antidepressant therapy; and “as-needed,” or episodic, treatment of MDD.
As a result, Sage is advancing four additional pivotal studies evaluating a 50 mg dose of zuranolone: a Phase 3 study in PPD, a Phase 3 study of use as an acute RRT in patients with MDD when co-initiated with new standard antidepressant therapy , a Phase 3 study in the acute treatment of MDD and an open label Phase 3 study evaluating the long-term safety, tolerability and efficacy of “as-needed” repeat treatment. Data from these studies are expected in 2021.
Upon closing of the transaction, Biogen and Sage will collaborate to further define the development and commercialization strategy for zuranolone.
Beyond PPD and MDD, zuranolone may also have potential in other psychiatric disorders including bipolar disorder and generalized anxiety disorder. SAGE-324 is a next-generation positive allosteric modulator of GABAA receptors in Phase 2 development for essential tremor with potential in other neurological conditions such as epilepsy and PD.
Essential tremor is one of the most common movement disorders estimated to affect over six million patients in the U.S., and current standard of care may be inadequate for many.
Following encouraging results from a Phase 1 open-label study in essential tremor, Sage advanced SAGE-324 to the Phase 2a KINETIC Study, which Sage is currently conducting.
The KINETIC Study is a 28-day placebo-controlled study in patients with essential tremor expected to read out in 2021.
Upon closing of the transaction, Biogen and Sage will collaborate to further define the development and commercialization strategy for SAGE-324 in essential tremor and, as appropriate, for potential expansion into other neurological disorders.
The strategic collaboration is global in scope and under the terms of the agreement, Sage will receive $1.525 billion in cash to be comprised of an upfront payment of $875 million and a $650 million equity investment in Sage from the purchase of approximately 6.2 million newly issued shares of Sage common stock at a price of $104.14 per share, representing a premium of 40 percent over the 30-day volume-weighted average share price of $74.39 per share as of November 25, 2020.
Should the zuranolone and SAGE-324 programs achieve certain development and commercial milestones, Sage will be eligible to receive up to approximately $1.6 billion in potential milestone payments. Biogen and Sage will share responsibility and costs for development as well as profits and losses for commercialization in the U.S.. Outside the U.S., Biogen will be responsible for development and commercialization, excluding Japan, Taiwan and South Korea with respect to zuranolone, and will pay Sage tiered royalties in the high teens to low twenties. Closing of the transaction is contingent on completion of review under antitrust laws, including the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in the U.S., and other customary closing conditions. The transaction is expected to close by the end of January 2021.
BIIB last traded at $241.75. SAGE last traded at $84.00.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Xilinx to be acquired by AMD for $35B in all-stock transaction
AMD (AMD) and Xilinx (XLNX) announced they have entered into a definitive agreement for AMD to acquire Xilinx in an all-stock transaction valued at $35B.
Under the terms of the agreement, Xilinx stockholders will receive a fixed exchange ratio of 1.7234 shares of AMD common stock for each share of Xilinx common stock they hold at the closing of the transaction.
Xilinx makes programmable logic devices
Based on the exchange ratio, this represents approximately $143 per share of Xilinx common stock. Post-closing, current AMD stockholders will own approximately 74% of the combined company on a fully diluted basis, while Xilinx stockholders will own approximately 26%.
The transaction is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.
AMD expects to achieve operational efficiencies of approximately $300 million within 18 months of closing the transaction, primarily based on synergies in costs of goods sold, shared infrastructure and through streamlining common areas.
AMD goes shopping taking advantage of Intel’s troubles
The transaction has been unanimously approved by the AMD and Xilinx Boards of Directors.
The acquisition is subject to approval by AMD and Xilinx shareholders, certain regulatory approvals and other customary closing conditions.
The transaction is currently expected to close by the end of calendar year 2021.
Until close, the parties remain separate, independent companies. Dr. Lisa Su will lead the combined company as CEO. Xilinx President and CEO, Victor Peng, will join AMD as president responsible for the Xilinx business and strategic growth initiatives, effective upon closing of the transaction.
In addition, at least two Xilinx directors will join the AMD Board of Directors upon closing.
Xilinx, Inc. designs and develops programmable devices and associated technologies worldwide. The company offers integrated circuits (ICs) in the form of programmable logic devices (PLDs), such as programmable system on chips, and three dimensional ICs; adaptive compute acceleration platform; software design tools to program the PLDs; software development environments and embedded platforms; targeted reference designs; printed circuit boards; and intellectual property (IP) core licenses covering Ethernet, memory controllers, Interlaken, and peripheral component interconnect express interfaces, as well as domain-specific IP in the areas of embedded, digital signal processing and connectivity, and market-specific IP cores. XLNX closed at $114.55.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Shares of Fulgent Genetics (FLGT) have surged during Wednesday’s session after the company reported second quarter results after the market close last night.
The company noted that it had “record” figures for quarterly revenue, billable tests, adjusted earnings, and adjusted EBITDA, as it has commercially launched several tests for COVID-19 since March 2020.
EARNINGS
In its latest report, Fulgent Genetics reported Q2 adjusted EPS of 17c on revenue of $17.3M, compared to analysts’ estimates of (5c) and $10.05M.
The company delivered 180,513 billable tests in the quarter, an increase of 1003% year-over-year, and gross margin for the quarter improved roughly eight percentage points from the previous quarter and roughly 81% year-over-year.
Commenting on the results, chairman and CEO Ming Hsieh said, “The global COVID-19 pandemic has tested who we are as a company, and now more than ever we have demonstrated that Fulgent is a technology company with a proprietary platform built for massive scale.
Our technology is the cornerstone for all facets of our business, including cloud computing, pipeline services, record management, web portal services, clinical workflow, sequencing as a service and automated lab services.
Covid-19 Test Kit
Our second quarter results illustrate how we quickly applied our technology to the needs of today, organically developing and launching multiple tests to detect COVID-19 with Emergency Use Authorization from the FDA, including an at-home test offered through Picture Genetics, our patient-initiated product.
These offerings have attracted major new customer accounts, resulting in an inflection point in our business and outlook.”
GUIDANCE:
On Fulgent’s quarterly conference call, CFO Paul Kim said that based on the “explosive” demand the company is seeing from the market and the quality of its customers, he continues to see the upward trajectory and transformation of the business continuing for the balance of 2020.
Fulgent now projects test volumes for 2020 to be over 1.3M, which translates to into over $120M in revenues. Kim added that he sees adjusted net income of $25M, or about $1.00 per share in FY20.
Analysts had expected the company to report FY20 EPS of 12c on revenue of $45.02M.
Analysts Comments:
Following the results, Piper Sandler analyst Steven Mah maintained an Overweight rating on Fulgent Genetics and raised his price target on the stock to $68 from $31.
Mah, who continues to believe COVID-19 testing is durable for the coming years, said he is encouraged by Fulgent’s early success in test volume, adding that his higher revenue estimates are due to increased COVID-19 expectations.
PRICE ACTION:
In afternoon trading, Fulgent Genetics shares are up nearly 23%, trading at $36.46.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
Sangamo executes global licensing agreement with Novartis for genomic medicines
Sangamo (SGMO) announced that it has executed a global licensing collaboration agreement with Novartis (NVS) to develop and commercialize gene regulation therapies to address three neurodevelopmental targets, including autism spectrum disorder, or ASD, and other neurodevelopmental disorders.
Sangamo signs distribution agreement with Novartis
The collaboration will leverage Sangamo’s propriety genome regulation technology, zinc finger protein transcription factors, or ZFP-TFs, to aim to upregulate the expression of key genes involved in neurodevelopmental disorders.
Zinc-finger protein transcription factors (ZFP TFs) can be designed to control the expression of any desired target gene, and thus provide potential therapeutic tools for the study and treatment of disease.
Novartis to use Sangamo to expand its markets
The collaboration will leverage ZFP-TFs engineered by Sangamo scientists in an effort to upregulate, or activate, the expression of genes that are inadequately expressed in individuals with certain types of neurodevelopmental disorders.
Under the terms of the agreement, over a three-year collaboration period, Novartis has exclusive rights to ZFP-TFs targeted to three undisclosed genes which are associated with neurodevelopmental disorders, including ASD and intellectual disability.
Novartis also has the option to license Sangamo’s proprietary AAVs.
Sangamo’s proprietary AAVs
Sangamo is responsible for certain research and associated manufacturing activities, all of which will be funded by Novartis, and Novartis assumes responsibility for additional research activities, investigational new drug-enabling studies, clinical development, related regulatory interactions, manufacturing and global commercialization.
Under the collaboration agreement, Novartis will pay Sangamo a $75 million upfront license fee payment within thirty days.
In addition, Sangamo is eligible to earn up to $720 million in other development and commercial milestone payments, including up to $420 million in development milestones and up to $300 million in commercial milestones.
Sangamo is also eligible to receive from Novartis tiered high single-digit to sub-teen double-digit royalties on potential net commercial sales of products arising from the collaboration.
SGMO is up 15% to $11.40. NVS is down 22 cents to $84.19.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.
